Many parents and grandparents who lent their credit to young loved ones in order to assist in financing their children’s or grandchildren’s education are unaware of a method that could potentially save them thousands of dollars. Some companies offer a co-signer release. A co-signer release allows for the co-signer to be released from legal responsibility for the duration of the loan once the borrower has proven he or she is capable of making all of the loan payments in full and on time themselves. Generally, a borrower must make at least a year’s worth of payments in full and on time before a co-signer may be released from liability on the loan.
However, each loan servicer’s terms for eligibility of a co-signer release differ, so it is important for borrowers and their co-signers to carefully read all terms and conditions prior to entering into the loan agreement. All too often, a borrower gets out of school and manages to make his or her student loan payments for a year and then goes into default after experiencing unexpected financial burdens such as a car accident or medical expenses. Once the borrower goes into default, the loan servicer may go after the co-signer to collect any outstanding balances on the loan. If the co-signer has already applied for and been approved of the co-signer release, the loan servicer is prevented from attacking the co-signer’s assets.
It is important for borrowers and co-signers to know their rights and to have the tools necessary to stay out of default. Student Loan Law Group offers an online community where members have access to knowledgeable attorneys who may direct them to repayment plans that better suite their needs. For more information on student loans, garnishment or default, contact Student Loan Law Group today at 888-843-1706.
